|| Shree Mumba Devi Prasanna ||


AGMARKNET
24 Sep 2021
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Policy + Research


Three farm bills and its implications explained

Three farm bills and its implications explained

To understand why farmers have raised their ploughs and drove their tractors blocking highways against these bills, we need to first understand the three controversial bills and the repercussions for the ruling party.

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Centre or Farmers Union – Who will blink first

Introduction

The Centre’s introduction of the three Bills on agriculture reforms – The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 and The Essential Commodities (Amendment) Bill, 2020 introduced in the Parliament on September 14 to replace the ordinances issued during the lockdown has turned out to be messy with many farmer unions opposing this while a few have been supporting this.

To understand why farmers have raised their ploughs and drove their tractors blocking highways against these bills, we need to first understand the three controversial bills and the repercussions for the ruling party.

Tussle between Centre and State

There is a tussle of power between the Centre and State. This has spilled over to Agriculture despite Agriculture and markets remaining a state subject. The states contend the ordinances are being seen as a direct encroachment into their domain and is directly against the very spirit of the constitution.

The centre, arguing that trade and commerce are a part of the concurrent list and it is very much a part of their domain which is in line with the Constitution.

The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Ordinance

The proposed Farmers' Produce Trade and Commerce (Promotion and Facilitation) Ordinance introduced by the Centre is aimed at opening up the agricultural sale and marketing outside of the notified Agricultural Produce Market Committee (APMC) mandis for farmers.

With this, barriers to inter-State trade is removed. It also provides a framework for electronic trading of agricultural produce.

The state governments hackles have been raised as they have been prohibited as the proposed ordinance from collecting a market fee, cess or levy for trade outside the APMC markets. The very purpose of the APMCs will be defeated as per the state government and it may result in a quick death for APMCs.

One must remember that APMCs were created to ensure there is a fair trade between buyers (middlemen) and sellers (farmers) allowing farmers to bag a fair price.

The role of APMCs is to regulate the trade of farmer’s produce, provide licenses to buyers, commission agents and private markets. APMCs are also authorized to levy market fees or any other charge as applicable on such trades.

The Centre on its part aims to make the ‘One Nation, One Market’ program materialize while the state and farmers want a ‘One Nation, One MSP’ program. Many feel by introducing this ordinance, APMCs would shut down and the minimum support price (MSP) that many base their very livelihood on may end up at the mercy of others.

The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Ordinance

This ordinance relates to contract farming. The ordinance is aimed at providing a framework on trade agreements for the sale and purchase of farm produce. The idea is to fix a price mutually agreed upon by both the buyer and seller thus, protecting and empowering the farmers.

As it would be a written agreement detailing out the quality, terms, conditions, produce, grade, standards, and price agreed upon.

The bone of contention in this case is, not the pricing protection that would actually help the farmer but, the mechanism for fixing the agreed prices. The fear of being exploited by corporate houses has led to this bill being objected to. The fear of a written contract over informal contracts (the norm) and fighting it out with a corporate house may not suit millions of farmers tastes.

The Essential Commodities (Amendment) Ordinance

The farmer are protesting on this ordinance as it effectively removes cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities. The amendment if enforced will deregulate the production, storage, movement, and distribution of these food commodities.

This could possibly lead to hoarding as traders and exporters generally tend to hoard during the harvest season as prices are lower and hike it when there is a demand.

The ordinance stipulates imposition of stock limit on agricultural produce must be based on price rise and stock limit is to be imposed only if there is a 100 percent increase in retail price of horticultural produce and a 50 percent increase in the retail price of non-perishable agricultural food items.

Bills on hold even as overall market situation improves

The three Bills have been put on hold by the Supreme Court even after a court appointed three-member committee submitted their report on 19 March 2021. No decision has been taken till date in this regard. Meanwhile, the centre and the farmers unions, have had 11 rounds of talks with both parties not many any headway.

Surprisingly, misapprehensions of a fall in agricultural produce due to the agitations has been unfounded based on the agriculture ministry data. The data suggests there has been an increase in overall rabi and kharif crop produced.

The centre even announced post the cabinet reshuffle, APMCs would be strengthened and they can borrow from the INR 1 lakh crore fund that has been announced. Even the Direct Benefit Transfer (DBT) scheme to farmers in Punjab has been successfully implemented.

In May 2021, INR 21,010 crore was transferred as the MSP out of the INR 25,280 crore owed to wheat farmers in April 2021 thus eliminating the need for commission agents or aarthiyas who had absolute control over the farmers.

Who blinks first

There is no conclusion to this story. The opposition parties disrupted the Parliament proceedings, the farmers have blocked highways in and around Delhi while the recently held meeting held by farmers unions in Muzzafarnagar in Uttar Pradesh showed political parties too joining the fray for their own gains.

The farmers in India hold the keys as many states in India including Punjab and Uttar Pradesh go to polls next year. The ruling party in the Centre have a few choices. They could blink first and withdraw these ordinances earning some good points in the bargain and effectively killing the opposition parties in one stroke.

Another option is to wait for the Supreme Court’s verdict and then play along. The third option is the most challenging  - to proceed as is and take a chance of losing votes in Uttar Pradesh which they cannot afford to lose at any cost.

By Pushpendra Shukla

Image credit: spmrf.org

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